RBC Sells Largest Structured Note Linked to Rates in One Year

Aug. 27 (Bloomberg) -- Royal Bank of Canada sold $200
million of three-year, fixed-to-floating rate securities, the
largest U.S. structured note linked to interest rates in a year.

The note, issued Aug. 22, yields 0.935 percent interest for
the first year, then pays 0.43 percent more than the three-month
London interbank offered rate with a minimum payment of 0.55
percent, according to a prospectus filed with the U.S.
Securities and Exchange Commission.

That’s the biggest structured note tied to rates since
Morgan Stanley issued $200 million of four-year securities, also
tied to Libor, on Aug. 26, 2011.

The sale gives RBC $370.9 million in rate-linked issuance
this year, more than double the total for the same period in
2011. The largest Canadian bank by assets is the only issuer to
increase sales of the notes in the U.S. this year, as the
Federal Reserve keeps interest rates near historic lows for a
fourth year.

RBC has the highest credit rating of the top ten U.S.
structured note issuers. Morgan Stanley, whose rating was
dropped to three levels above junk by Moody’s Investors Service
on June 21, has sold 74 percent fewer rate-linked securities
this year after issuing the most last year.